Q1 earnings put Pinnacle West Capital (PNW) back in focus

Pinnacle West Capital (PNW) is back on investors’ radar after first quarter 2026 results showed sales of US$1,149.6 million and net income of US$32.92 million, compared with a loss in the prior year period.

The Q1 return to profitability and the recently affirmed quarterly dividend of US$0.91 per share have come alongside a 15.52% year to date share price return and a 44.72% three year total shareholder return. This suggests momentum has been building over a longer horizon despite some short term softness.

If this improvement has you reassessing utilities, it could be a good moment to look beyond a single stock and scan 36 power grid technology and infrastructure stocks

With PNW now profitable again, a US$0.91 quarterly dividend affirmed and the stock trading close to analyst targets, the key question is whether there is still value on the table or if the market is already pricing in future growth.

Most Popular Narrative: 3.8% Undervalued

The most followed narrative currently places Pinnacle West Capital's fair value at about $105.86, slightly above the last close of $101.82. This frames the recent Q1 rebound in a context of modest undervaluation rather than extreme mispricing.

Sustained population and economic growth in Arizona, supported by record new jobs and major investments, is driving robust customer and volumetric demand, which underpins long-term revenue and earnings growth expectations. Pinnacle West's accelerated infrastructure investments in transmission, distribution, and generation (including the new regional natural gas pipeline and major grid projects) are expected to significantly expand the regulated rate base, supporting higher allowed returns and future revenue growth.

Want to see what is sitting underneath that fair value call? The narrative leans heavily on steady revenue expansion, firmer margins, and a future earnings profile that assumes the Arizona growth story keeps feeding the regulated rate base. The exact mix of growth, profitability and required return matters a lot here, and the full narrative spells out how those pieces fit together.

Result: Fair Value of $105.86 (UNDERVALUED)

However, you also need to weigh risks such as regulatory lag on cost recovery and the possibility that large project build outs outpace actual customer demand.

Another Angle: DCF Says PNW Looks A Bit Rich

Analysts see Pinnacle West Capital as about 3.8% undervalued around $101.82 versus a fair value of $105.86, but the Simply Wall St DCF model points the other way. On that approach, an estimated value of $89.36 suggests the stock is trading at a premium rather than a discount. Which lens do you trust more when the story is this finely balanced?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Pinnacle West Capital for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 48 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With the signals in this article pulling in both directions, it makes sense to move quickly and test the numbers yourself. You can start with the 4 key rewards and 2 important warning signs.

Looking for more investment ideas?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.